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Combating smog and the PIT tax relief

To begin with, why it necessary to combat smog? The seriousness of smog’s impact on our health can be seen from the fact that more frequent cases of sinusitis, upper respiratory tract damage, asthma, lung disease and bronchitis are being reported. Most of these, illnesses are precisely the consequence of the effects of toxic dusts and gases which cause long-term damage to our health, as has been proven by many experts. It should also be noted that during the heating period, there is an increase in other gases such as carbon monoxide, carbon dioxide, sulphur, nitrogen or nitrous oxide.

It is worth stressing that, in order to fight smog, it is important to build the inhabitants’ awareness of the worsening state of air in Poland. The creation of various programs  for replacing cookers with new ones, or the creation of tax reliefs for the fight against smog, may contribute to raising public awareness of the very essence of caring for our environment, or at least to making them more willing to join in this flight. Encouraging the public by offering reductions may therefore be a form of government action against smog.

Thermomodernization relief

What exactly is it about? The issue of the tax is regulated by Article 26h (1) of the PIT Act, which entitles to a deduction of expenses connected with the realization of a thermomodernization undertaking, which is defined in Article 2 (2) of the Act on supporting thermomodernization and renovations. In accordance with this provision, a thermomodernization project is a project of which is improvement as a result of which the demand for energy supplied for heating and heating of utility water reduced. The term is also understood as the improvement as a result of which there is a reduction in primary energy losses in local heating networks and local heat sources supplying them, as well as the construction of a technical connection to a centralized heat source.

Additionally, in order to dispel any doubts, the Ministry of Finance has published explanations that indicate a number of conditions that the owner must meet in order to benefit from the preference. The first of the premises to benefit from the tax relief is the fact of owning or co-owning a house. This possibility has also provided for the investor, however, if he does not have the title of the owner or co-owner of the house, he will not be able to benefit from the preferences. The second condition is the necessity to own a single-family house. Translating this into the situation of multi-family house – it will not be possible to take advantage of the tax deduction here.

Moreover, as the Ministry of Finance points out, the house cannot be under construction, its construction must already be completed and the usable part should not exceed 30% of the total area. Thus, in the event that half of the building’s area is occupied by a shop, the tax relief will not apply here.

As a fifth condition, the Ministry points out the possibility to deduct only those purchase expenses that have been strictly defined in the Regulation of the Minister of Investment and Development. This document defines specific types of building equipment or even services that are connected with the thermomodernization undertaking. As stated in the explanations, if we want to replace the windows and deduct the tax, it will be possible only when replacing the whole window, not its part – the windowpane.

Unfortunately, this is not the end of the conditions, we should also still mention the limits, which have been set to the value of 53 thousand PLN, and in the case of owning several houses, the value of each of them adds up to just this amount. In addition, such expenses must be properly documented with invoices documenting costs that were incurred from 1 January 2019 – only from this period is the deduction possible.

What is deductible?

The catalogue of expenditures entitling to thermomodernization reliefs is set out in the Regulation of the Minster of Investment and Development. Expenditure is listed here above all:

  • incurred in the purchase of building materials for insulation or heating installations,
  • installation of new windows,
  • installation of solar collectors,
  • for a considering gas boiler,
  • heat pump installation,
  • for mechanical ventilation with air heat recovery,
  • for the insulation of building envelopes or balcony slabs or foundations, or
  • installation of a photovoltaic system.

The above-mentioned costs are only examples which may be covered by tax relief if the relevant conditions are met. Undoubtedly, offering such a large number of tax incentives may translate into citizens’ willingness to use different, more environmentally friendly alternatives.

It is worth mentioning that the purpose of the thermomodernization allowance is to use modern ecological solutions, to take action to reduce carbon dioxide emissions into the atmosphere by citizens and, above all, to encourage citizens to emphasize the importance of taking care of the environment. Will the introduction of additional tax incentives help to change public awareness and convince them to fight smog in their everyday lives? We hope so, but we will only find out about the effects of such measures in the future.